The University of Oxford’s £3 billion endowment fund has pledged to divest from fossil fuels as unrelenting calls from students piled pressure on the institution to create a climate-conscious investment strategy.

A motion passed by Oxford university’s governing body, which comprises some 5,500 academic and administrative members, requires the institution’s endowment to sever all ties with fossil fuel providers and block future investment in the sector.

The motion also stipulates that Oxford's fund managers must obtain evidence of “net-zero business plans” from companies held within the endowment’s portfolio, which in 2018 posted an 8.8% return. 

The university’s decision to bow to pressure from students and campaigners underscores the growing momentum behind ethical investing, which requires funds to consider strongly environmental, social and governance factors when building investment theses.

Cameron Hepburn, director of the Oxford Smith School for Enterprise and Environment, said: “Oxford has led the world on research on net-zero in science, finance and economics, and we have shown leadership and creativity in our position on net-zero with employers of Oxford graduates.

“It is excellent that we are also taking a logical and hard-nosed approach to the impact of our endowment. The proposed combination of divestment and engagement around net-zero is more powerful than either strategy alone.”

The decision should appease strong-minded cohorts of Oxford students, many of whom protested earlier this year by occupying St John’s College, the town’s wealthiest, over its £8 million investments in petroleum giants BP and Shell.

Alumni of the college have threated to withhold donations unless it committed to selling its positions in the two fossil fuel companies.

An analysis published earlier this year revealed that almost all of Britain’s top universities had pledged to – at least partially – divest from fossil fuels amid intensifying campaigns led by students.